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emc011075, Tax adviser
Category: Tax
Satisfied Customers: 3173
Experience:  IRS licensed Enrolled Agent and tax instructor
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On inherited property, expenses including repairs were made

Customer Question

On inherited property, expenses including repairs were made on inherited property up to 18 months prior to sale. Is there a time limitation as to what expenses you can take?
Submitted: 1 year ago.
Category: Tax
Expert:  emc011075 replied 1 year ago.

Hi. My name is ***** ***** I will be happy to help you.

The expenses are not deducted, they are added to the basis of the property when calculating capital gains. There's no time limit.

To calculate your capital gains you will add the expenses, plus expenses of the sale to the fair market value of the property on day inheritance and you deduct it from the sales price. If the result is a loss and the property was used for personal purposes (not business or investment), you will not be able to claim the losses but you will still have to claim the capital gains, if any.

Customer: replied 1 year ago.
Thank you - can I capitalize all of the expenses for the entire period (18 months)
Expert:  emc011075 replied 1 year ago.

Not exactly. When you sell the property you will have to figure out capital gain or loss. You will use your expenses to reduce the sales price. There's no time limit how far back you can go to add the cost of improvements. If you owned the property for 10 years, than you can add cost of improvements for 10 year.

Expert:  emc011075 replied 1 year ago.

The expenses are not deducted or capitalized/depreciated separately. The expenses are used to reduce your capital gains on the sale of the property.

Expert:  emc011075 replied 1 year ago.

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